The European Commission wants to create a form of company across Europe to make cross-border business easier to conduct for small firms.

Internal markets Commissioner Charlie McCreevy has announced a consultation on the proposal.

"If we want European businesses to reap the full benefits of the single market, we must provide them with the most appropriate means," said McCreevy.

McCreevy has proposed the creation of the European Private Company Statute which would provide a form for companies to take which would apply across Europe. He has launched a consultation process to determine whether there is demand for the move among European businesses.

"The European Private Company may be the right way forward. But first we need to have a clear picture of the obstacles companies still face in the single market and to find out whether a possible Statute could be a viable solution. So I encourage all interested parties, and in particular SMEs, to give us their views," he said.

The proposal is part of a wider action plan undertaken by the commission to modernise company law.

In a study published as part of an earlier proposal, the commission listed the arguments for and against the plan country by country. The UK was thought to be likely to benefit from it because its small and medium sized enterprises (SMEs) were described as "dynamic and organised", the economic system was liberal, the English language is the lingua franca of business worldwide, and the UK is already economically powerful.

Reasons why the UK might not benefit were listed as the fact that 45 per cent of the workforce works in large organisations, and the fact that the country has not adopted the euro, so is likely to lag behind in European business integration.

"The objective is to make it easier for European SMEs to conduct cross-border business by providing them with a European legal form, uniform in each Member State," said a commission statement. "Considerable support for this initiative was confirmed in the public consultation on the future of the Company Law and Corporate Governance Action Plan."

"In February 2007 the European Parliament adopted a resolution requesting the European Commission to draw up a uniform Statute for a European Private Company," it said.